How is it possible that some companies’ human resources departments can act with such indifference that they actually behave in a manner that is inhumane and unresourceful?
In some circles and industries, an increasing trend is taking hold where recruiting departments have resorted to crafting lengthy recruiting contracts issued by newly centralized recruiting departments. In these examples, the departments have gone well beyond centralization and have engaged in a practice and approach best described as militarization.
Before I go on, let me state that I thoroughly understand the need to consolidate recruiting activity, as well as monitor recruiting expenses and costs from one single, centralized function. This is especially true when such companies are no longer medium-sized and have joined the ranks of the Fortune 500 and particularly publicly traded companies that operate under the watchful eye of multiple government agencies.
But when reading the language and clauses of “recruiting agreements” put forth by these emboldened “militarized” recruiting departments, one is left to question the real intentions of such an agreement.
Is it to promote recruiting partnerships? Or, are these contracts being created to confound the search firm from recruiting at all? More of these militarized recruiting agreements seem to point to the latter.
Some of the “recruiting vendor contracts” that have become a by-product of the overall centralization/militarization efforts indicate that the company would actually prefer if you (the external recruiter) fail at delivering candidates rather than succeed in filling openings!
My law classes remind me that bilateral contracts require several key components, which include the following:
- Lack of duress (both physical and economic).
- Both parties are of legal age.
- The contract consisting of lawful activity (you can’t contract a hit man, for example).
- Consideration exchanged for service/goods provided (this consummates the contract).
- Absence of being overly one-sided.
- Good faith/intentions (varying implications depending on industries/types of contracts).
If you sign a contract under duress (e.g., “sign or some harm will come to you!”), that could invalidate the contract. Such harm can be physical or economic.
I know something about economic duress, as I used the economic-duress defense 15 years ago to win a dispute against a New Jersey company that settled out of court in our favor after a judge let it be known which way things were heading.
Deciphering Confusing Terms
Some of these contracts contain baffling phrasing involving non-solicitation clauses; fines for reverse recruiting; are overly heavy-handed, possess lengthy non-compete periods; and impose severe restrictions on communication with management. Some contain clauses that extend too-great authority to the client company with regard to duplicate candidate submissions.
A few creative, clever companies got around point No. 4 by taking the contract wording one step further. Since you can not hold a recruiting firm liable for reverse recruiting under a contract with no business transaction or compensation ? one clause I reviewed for this article demanded that the search firm pay a $10 “consideration” fee in order to become an approved vendor. Now that took some big Chicken McNuggets on the company’s side to put into wording.
To put this into perspective, could you imagine demanding that your landscaping contractor pay you $10 before he could set foot on your property for the privilege of submitting a price quote for a new patio?
Where in this country would you find a contractor or any business professional worth a dime (licensed/bonded/insured/with references) who would pay you for the privilege of providing a quote? The good ones I know will charge me, the homeowner, $350 just for an initial site design (equivalent to being paid to produce a recruiting plan in our industry).
Our recruiting industry takes such abuse on the chin and seems to enjoy the punishment, which no other similar service industry would ever tolerate. When I try to draw parallels with service-based professionals working on a fee/contingency basis, I come up with this list as one example:
- Travel agents.
- Contingency lawyers.
- Real estate sales professionals.
- Insurance producers/sales reps.
Off this short list, I find contingency lawyers and real estate professionals are the closest cousins to the search industry. No attorney would work on your case on contingency, knowing you are “cheating” while using two other attorneys. That would create chaos if the case went to court. Same goes for competent real-estate marketers.
Now let’s look at the real estate industry for a moment. Realtors have to be trained like recruiters. They have to be licensed like recruiters (in most states). They can go on to acquire additional certifications, like recruiters.
Stop and imagine a Realtor entering into a home marketing agreement and then letting you sign two or three other Realtor listing agreements simultaneously. Would that happen?
No Realtor would put up with the idea of your using multiple realtors while they invested thousands of dollars of their own monies to bankroll marketing, advertising, attending/hosting open houses, posting Internet features, etc. to drive traffic to your home.
Yet our search industry puts up with this daily. We allow a client to sign a contract. And just as we begin work, that same client is probably racing to get two or three more recruiters involved on the same “search party” simultaneously!
It’s a disgrace to both the companies and recruiters that engage in this type of charade.
We get what we deserve. We treat ourselves cheaply and as a dispensable commodity, and we are now getting the treatment we’ve come to ask for from militarized recruiting departments forced to close the gaps for those in our industry who do not engage in self-regulation and self-discipline.
Some of these agreements are getting too ridiculous and insulting to our profession. Too many militarized recruiting agreements reek of false pretenses that have nothing to do with establishing a recruiting protocol.
From Contract Confusion to Contract Reality
While many centralized agreements are honorable and prepared with good-faith intentions, a number of agreements are apparently designed to create the illusion that recruiting alliances would continue with chosen search partners.
However, these agreements instead seem to place greater value on other concessions buried within the contract.
So what is it these companies are after if it is not recruiting services?
Why use these agreements if they truly never intend on using your services, or plan to issue searches under impossible constraints?
I spoke with employment specialist attorneys around the country on this subject, as well as several national recruiting trainers and speaking gurus I consider esteemed colleagues and reliable sources. The consensus was unanimous that a growing number of “newly revised” militarized recruiting contracts written by battalions of in-house lawyers are dubious in nature. Although I am not an attorney (please consult your attorney for all contract-related questions), I find that the real hidden value contained in these contracts include:
- Non-employee solicitation clauses. This is probably the most valuable benefit the company might derive from an otherwise useless contract.
- Non-communication clauses. If communication is restricted to the appointed recruiter, he or she can stonewall all day about job-search status and you will never know better.
- Illusion. The “illusion” of continuing a recruiting relationship to invoke the above two clauses.
- Fear. If they can intimidate you into believing there is hope you will not raid their company.
Actual Contract Language Revealed
Consider some of these real-world examples:
“? No communication or dialogue is to occur with any hiring manager ?”
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If it were not for the hiring manager’s knowledge of the search firm’s abilities, human resources would never have known of the firm to begin with. I can count on one hand when human resources actually reached out to any recruiter without being cattle-prodded by management.
If you do not trust the search firm, do not hire them. If you trust them, let them do their job, which is to fill your company’s positions. This process requires constant communication with decision-makers and not middle-person interpreters, translators, or revisionists. If you must stay in the loop, then participate in conference calls.
” … Payment in the amount equal to one-year’s salary is required for any recruitment of company’s existing employees ?”
In this case the “fine” for reverse recruiting (poaching) would be the value of the recruited candidate’s first-year salary. You can’t blame the company, as case laws around the United States have favored search firms when poaching did take place while the said search firm was attempting to place a candidate with the simultaneously poached client.
Some of this raises more issues, such as who is a client, and how long is a client considered a client after no activity? At IRES, we abide by NAPS ethics and guidelines in the absence of a client-specified statement on client status. That period is one year.
One recruiting representative of a financial-services firm based in the Northeast stated:
” … I don’t care what vice presidents may be in charge of. Regardless of the title on the business card, I’m in charge of determining who interviews which candidate and which location gets to interview. I run this company, not our VPs; they just think they do …”
That person was a low-level recruiter earning in the mid-fifties range yet felt he exerted more authority than vice presidents. Ouch!
This is an example of militarized recruiting. I forwarded this email to the actual VP, who was astonished to discover the manner his centralized recruiter used when speaking to other business partners.
” ? In the event of multiple resume submissions, the company shall make the sole and final determination as to which recruiting vendor has earned the fee ?”
Very endearing language, isn’t it? And here I thought as president of my search firm that such decisions rested upon my shoulders.
The only time a company needs more than one recruiter is when the first engaged recruiter turns out to be incompetent. Period.
The company is setting itself up for failure when you invite search-party tactics.
If you are using five recruiters, they must all stink or you wouldn’t need so many. Either that, or your company stinks and you have an impossible position to fill.
The companies we have the greatest consistent success with and have decades of ongoing relationships with are those that allow us to work as the experienced, competent, professionals we are. The successful companies allow us to interact harmoniously with decision-making managers whereby executive recruiting consultants and internal recruiting are all being treated as equals.
There is no animosity. No tension. No hidden agenda. And no struggle for the protection of internal fiefdoms or job-security juxtapositioning by internal HR.
Many newly formed centralized recruiting departments were designed quite well and avoid the troublesome issues outlined in this article. Most permit necessary management dialogues necessary to perform a quality professional service.
To be fair, not all centralized recruiting departments micro-manage, exhibit insecurities, or constrict the ability to perform the very recruiting services that were requested. This is, after all, the way it should be for any professional to deliver professional results.
The next time you are confronted with a newly militarized human resource contract, consider it more carefully and read between the lines to find the true hidden meaning before you sign. Consider the repercussions to your industry and whether your value and integrity is worth compromising to corporate arm-twisting.